Brown & Brown, Inc. (BRO) | Investment Case

1. Company Snapshot

1.a. Company Description

Brown & Brown, Inc.markets and sells insurance products and services in the United States, Bermuda, Canada, Ireland, the United Kingdom, and the Cayman Islands.It operates through four segments: Retail, National Programs, Wholesale Brokerage, and Services.

The Retail segment offers property and casualty, employee benefits insurance products, personal insurance products, specialties insurance products, loss control survey and analysis, consultancy, and claims processing services.It serves commercial, public and quasi-public entities, professional, and individual customers.The National Programs segment offers professional liability and related package insurance products for dentistry, legal, eyecare, insurance, financial, physicians, real estate title professionals, as well as supplementary insurance products related to weddings, events, medical facilities, and cyber liabilities.

This segment also offers outsourced product development, marketing, underwriting, actuarial, compliance, and claims and other administrative services to insurance carrier partners; and commercial and public entity-related programs, and flood insurance products.It serves through independent agents.The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance through independent agents and brokers.

The Services segment offers third-party claims administration and medical utilization management services in the workers' compensation and all-lines liability arenas, Medicare Set-aside, Social Security disability, Medicare benefits advocacy, and claims adjusting services.The company was founded in 1939 and is headquartered in Daytona Beach, Florida.

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1.b. Last Insights on BRO

Brown & Brown's recent performance faced challenges due to a softening insurance rate environment. Despite this, the company delivered organic revenue growth and strong free cash flow. Its acquisition of Accession Risk Management Group boosted revenue by a third and enhanced cost efficiencies. However, higher expenses offset some of the gains. The company's Q3 results reflected increased organic revenues, higher commission and fees, and expanded EBITDAC margin. A 10% increase in quarterly cash dividend rate and authorization for up to $1.5 billion share buyback were announced. (Source: Globe Newswire)

1.c. Company Highlights

Last Price	78.37
Change Percentage	-1.59%
Open	79.85
Previous Close	79.64
Market Cap ( Millions)	26757
Volume	1687060
Year High	125.68
Year Low	76.17
M A 50	85.44
M A 200	102.11

FCF Yield	5.03%
Dividend Yield	0.78%
ROE	10.72%
Debt / Equity	2.56%
Net Debt / EBIDTA	-167.09%
Price To Book	2.09
Price Earnings Ratio	25.97
Price To FCF	19.86
Price To sales	5.02
EV / EBITDA	12.55

2. Brown & Brown's Q3 Earnings: A Strong Performance

Brown & Brown, Inc. delivered a robust financial performance in the third quarter, with revenues reaching $1.6 billion, representing a 35.4% total growth and 3.5% organic growth. The company's adjusted EBITDAC margin improved significantly by 170 basis points to 36.6%. Adjusted earnings per share (EPS) grew over 15% to $1.05, surpassing analyst estimates of $0.9. The strong EPS performance was a notable highlight, driven by the company's continued focus on driving earnings per share growth and meaningful shareholder value.

Publication Date: Oct -29

                                    📋 Highlights
                                    Revenue Growth::
                                                Total revenue reached $1.6 billion, reflecting a 35.4% increase and 3.5% organic growth.
Margin Improvement::
                                                Adjusted EBITDAC margin rose 170 basis points to 36.6%, with adjusted EPS growing over 15% to $1.05.
Acquisitions Completed::
                                                7 acquisitions finalized, including Accession, with combined annual revenues of $1.7 billion.
Cash Flow Performance::
                                                Generated $1 billion in cash flow from operations for the first 9 months of 2025, up 24% ($190 million increase).
Debt Leverage Targets::
                                                Aims to return to 0–3x gross and 0–2.5x net leverage within 12–18 months, with a $1.5 billion buyback authorization.

                                

Segment Performance

The Retail segment delivered organic growth of 2.7%, impacted by approximately 1% due to employee benefits incentives. Specialty Distribution delivered organic revenue growth of 4.6%, driven by strong brokerage performance. The company's international businesses, particularly in the UK, are performing similarly to the US, with slower economic growth and rate pressure.

Cash Flow and Capital Deployment

Brown & Brown generated $1 billion of cash flow from operations in the first 9 months of 2025, an increase of over $190 million or 24% growth. The company's cash flow conversion ratio was approximately 23.5%, 100 basis points higher than the prior year. The company's strong cash flow generation and balance sheet position it well for continued investment in growth opportunities, including acquisitions and share repurchases.

Outlook and Valuation

Looking ahead, the company expects its organic growth to be similar to the third quarter, with the Retail segment expecting similar growth and Specialty Distribution expecting a decline in the range of mid-single digits. Analysts estimate next year's revenue growth at 24.4%. With a current P/E Ratio of 27.3 and EV/EBITDA of 13.98, the market appears to be pricing in a significant growth premium. The company's strong financial performance and growth prospects suggest that it is well-positioned to drive long-term shareholder value.

Risk Factors and Challenges

The company faces some challenges, including the impact of the government shutdown on certain businesses, such as Medicare and social security set-aside, as well as flood business. Additionally, the company is navigating cross-currents in the employee benefits business, including cost push, labor market growth, and companies looking to manage costs. However, the company's diversified business model and strong financial position help mitigate these risks.

3. NewsRoom

4 Stocks to Watch From the Thriving Insurance Brokerage Industry

Dec -04

Source: zacks.com

Best Dividend Aristocrats For December 2025

Nov -29

Source: seekingalpha.com

AXQ Capital LP Buys Shares of 2,469 Brown & Brown, Inc. $BRO

Nov -25

Source: defenseworld.net

Rep. Byron Donalds Purchases Shares of Fortinet, Inc. (NASDAQ:FTNT)

Nov -21

Source: defenseworld.net

Rep. Byron Donalds Buys Chipotle Mexican Grill, Inc. (NYSE:CMG) Shares

Nov -21

Source: defenseworld.net

Carnival (NYSE:CCL) Shares Acquired Rep. Byron Donalds

Nov -21

Source: defenseworld.net

George Soros Significantly Increases Stake in Amazon.com Inc

Nov -14

Source: gurufocus.com

Brown & Brown, Inc. earns 2026 Military Friendly® Employer designation and Silver 2026 Military Friendly® Employer Award

Nov -11

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.40%)

6. Segments

Retail

Expected Growth: 8.0%

The growth is slightly lower than the global hypothesis due to potential competition in the retail market, but the segment's diversified product offerings should support steady growth.

Programs

Expected Growth: 9.5%

The expected growth is higher than the global hypothesis because the specialized nature of the programs and the niche markets they serve can command higher premiums and attract less competition, driving growth.

Wholesale Brokerage

Expected Growth: 8.2%

The growth is slightly below the global average due to the intermediary nature of the business, which can be subject to market fluctuations, but its essential role in the insurance supply chain supports a growth rate near the global hypothesis.

Other

Expected Growth: 9.0%

The expected growth is higher than the global hypothesis because the diverse businesses within this segment, such as managed care and third-party administration, are likely to experience higher demand, driving growth above the average.

7. Detailed Products

Retail Brokerage

Provides insurance brokerage services to individuals, families, and small businesses

National Programs

Offers specialized insurance programs for niche industries and professions

Wholesale Brokerage

Provides access to specialty insurance markets for hard-to-place risks

Services

Offers a range of services including claims management, risk management, and compliance consulting

MGA/MGU

Acts as a managing general agent (MGA) or managing general underwriter (MGU) for insurance carriers

8. Brown & Brown, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Brown & Brown, Inc. is medium due to the presence of alternative insurance brokers and agents. However, the company's strong brand reputation and customer relationships mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for Brown & Brown, Inc. due to the company's diversified customer base and lack of concentration of customers. This reduces the negotiating power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Brown & Brown, Inc. due to the presence of a few large insurance carriers. However, the company's scale and diversification of suppliers mitigate this threat to some extent.

Threat Of New Entrants

The threat of new entrants is low for Brown & Brown, Inc. due to the high barriers to entry in the insurance brokerage industry, including regulatory hurdles and the need for significant capital investment.

Intensity Of Rivalry

The intensity of rivalry is high in the insurance brokerage industry, with many established players competing for market share. Brown & Brown, Inc. must continually innovate and improve its services to maintain its competitive edge.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	40.49%
Debt Cost	6.29%
Equity Weight	59.51%
Equity Cost	7.93%
WACC	7.27%
Leverage	68.04%

11. Quality Control: Brown & Brown, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

M&T Bank

A-Score: 6.6/10

Value: 6.6

Growth: 5.6

Quality: 6.8

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

Truist

A-Score: 5.8/10

Value: 4.8

Growth: 2.8

Quality: 5.5

Yield: 8.0

Momentum: 6.0

Volatility: 8.0

1-Year Total Return ->

Arthur J Gallagher

A-Score: 5.5/10

Value: 2.1

Growth: 6.7

Quality: 7.1

Yield: 2.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

Prudential Financial

A-Score: 5.5/10

Value: 5.7

Growth: 3.4

Quality: 4.9

Yield: 8.0

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

Brown & Brown

A-Score: 5.3/10

Value: 3.4

Growth: 7.4

Quality: 8.1

Yield: 1.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

Marsh McLennan

A-Score: 5.1/10

Value: 2.7

Growth: 6.6

Quality: 5.9

Yield: 3.0

Momentum: 3.0

Volatility: 9.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

2.82%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.27%

Brown & Brown, Inc. - US1152361010

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BRO

1.c. Company Highlights

Expensive

Higher Growth

Better Quality

Earnings Beats

Revenues Beats

Lower Yield

Strong Momentum

Less Volatile

Revenues Miss

2. Brown & Brown's Q3 Earnings: A Strong Performance

Segment Performance

Cash Flow and Capital Deployment

Outlook and Valuation

Risk Factors and Challenges

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.40%)

6. Segments

Retail

Expected Growth: 8.0%

Programs

Expected Growth: 9.5%

Wholesale Brokerage

Expected Growth: 8.2%

Other

Expected Growth: 9.0%

7. Detailed Products

Retail Brokerage

National Programs

Wholesale Brokerage

Services

MGA/MGU

8. Brown & Brown, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Brown & Brown, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

78.37$

Current Price

78.37$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA